EU-Google Antitrust Investigation Takeaways

The EU's decision to launch a formal antitrust investigation into Google's business practices has many highly significant implications going forward.

Takeaways:

First, it is obvious that the EU antitrust authorities have concluded informally that Google is a monopoly.

• That conclusion is implicit because the Google behavior the EU is now formally investigating would only be anti-competitive, if Google was indeed a monopoly.
• Also implicit in this action is that monopolies, or companies which have dominant share, cannot behave in the same way that competitors without market power do.
• Simply, because monopolies inherently have the market power to anti-competitively disadvantage competitors, they have a implicit legal obligation to not do so.

Second, this is a sweeping investigation, looking into multiple ways that the EU suspects Google has operated anti-competitively:

• Discriminating against competitors in unpaid and paid search results;
• Self-dealing in favor of Google's products, services and content;
• Imposing "exclusivity obligations on advertising partners;" and
• "Restrictions on the portability of online advertising campaign data."

What this means is that the EU apparently has deep and wide concerns about multiple patterns of alleged anti-competitive behavior.

• Put another way, this is not an investigation of one-off complaints, but a serious major investigation of alleged systematic anti-competitive practices by Google.

Third, this puts significant jurisdictional pressure on the DOJ to follow suit, because if the DOJ agrees with the EU, it likely will want to cooperate with the EU so the practical global locus of antitrust authority over American companies does not shift from the U.S. to the EU.

• In other words, if the DOJ agrees with the EU's concerns, it will want to proceed with its own investigation so companies in the future don't "forum shop" and first take their antitrust complaints to the EU and not the DOJ.

What is seriously problematic for Google here is that it is highly likely that the DOJ is working closely with the EU and has similar concerns about Google's market behavior.

• That's likely because the DOJ:
  • Threatened a Sherman Section 1 & 2 anti-monopolization case against Google in 2008 to get Google to drop its proposed Google Yahoo ad agreement;
  • Twice opposed the Google Book Settlement in 2009 and 2010 as illegal under antitrust, copyright, and class action law; and
  • Imposed on Google a court-supervised consent decree in 2010 preventing Google from continuing to anti-competitively collude to deny its employees fair market compensation.

Fourth, the EU has a more formal process with more public deadlines than the U.S. does so this forum means that 2011 could be a very big antitrust year for Google in the EU.

Fifth, this development has big implications for Google's expansion into market "verticals" because Google uses all of the alleged anti-competitive behaviors to make it much easier to extend its monopoly power in search/search advertising to local or vertical markets.

• Specifically, this EU investigation increases the chances that:
  • The DOJ will oppose the proposed Google-ITA acquisition;
  • The Court will oppose the Google Book Settlement;
  • The courts hearing the MyTriggers, TradeComet, and Skyhook Wireless complaints against Google in the U.S. could provide a more sympathetic hearing; and
  • Google's reported likely acquisition of Groupon, would likely attract substantial antitrust scrutiny as well, especially if the DOJ, and not the FTC, were to review it.

In sum, the EU's launching of a broad formal antitrust investigation of Google increases the risk substantially that Google ultimately is found to be a monopolist guilty of anti-competitively abusing its market power in either the EU or the U.S. or both.

• This EU development is also an affirmation of Precursor's unique and early Google antitrust research over the last three and a half years, which can be found at www.Googleopoly.net.
• To best see the "big picture" of antitrust issues facing Google, see the pictoral powerpoint presentation:"Googleopoly VI: Seeing the Big Picture -- How Google is Monopolizing Consumer Internet Media."